The impact of climate change on SMEs of the UK, especially on small businesses is the topic of this paper. I am very much grateful to express my gratitude to all those people who have been very helpful to me in completing this paper. Firstly I would like to thank the almighty God. Then I would like to thank my professor who offered me great help. I am grateful to the staff of my University library who had a contribution to my paper. Also, I want to thank my beloved friends and seniors for their kind help. I honestly appreciate the staff of the Department of Business Administration for their frequent help. To make this research I used packs of journals, magazines, newspapers, books, websites etc. I sincerely admit their contribution.
At present climate change is considered a global issue. As a result of climate change, the UK will become a more vulnerable country in the world. The national economy of a country greatly affected by climate change. The effects of such climate change have great impacts on the national economy of a country. Small and medium enterprises (SMEs) have the impact of climate change that affect our economy as SMEs are accountable for 25 percent of GDP, 80 percent of industrial jobs and 25 percent of the total labor force in the UK. Climate change is now the hottest issue that the business community is facing. So, this report is based on “The effects of climate change on SMEs in the UK”. This paper focuses on the most important effects of climate change on SMEs and also provides some recommendations. Almost 80 percent of people in the UK live in rural areas, 54 percent of them creating a spur for rural SMEs. For this reason, we think that this paper will be suitable for them to get combined views of climate change which affecting SMEs in the countryside.
Demand for businesses to respond to climate change threats based on their dominant position within the global community is growing. The result of the effective integration of integrating strategies, people, processes and technology into pursuing initiatives that can respond to climate change, can be considered as a powerful tool in creating long-term value. The variation in the magnitude of climate change impacts on business activity is the key factor in the difference between direct and indirect effects of climate change. Some of these effects threaten maintainable high performance rather than climatic conditions. In response to climate change, business enterprises are generally spread over a wide range of activities, at risk of isolation. Various sectors of our planet, the framework and the projections can be transformed by Climate change through which businesses generally function today. In the response to the climate change effect, many business leaders feel the responsibility to play their role. However, apart from this notion of social obligation, business leaders also need to be aware of the way of changing market dynamics, competition and productivity.
CHAPTER ONE: INTRODUCTION
This first chapter is maintained as an introductory guideline of the dissertation which consists of six sub-sections: background, information and problem, clarification of the research aims and objectives, scope and synopsis. The main field of this study is based on climate change integration to risk assessment and the economic impact for businesses in the UK. The overall methodological approaches are mostly shaped on the grey literature, especially, the UK Climate Change Risk Assessment Reports I and II which were published in 2012 and 2017, and the third report is expected to be published in 2022.
1.1 Research Background
In this section, brief historical facts and effects are reflected in order to better understand the research subject. The challenges of climate changes are closely related to the planet and human beings as people dramatically turn the environment into their own interests especially after Industrial Revolution. The US energy secretary, Rick Perry stated that “to stand up and say that 100% of global warming is because of human activity; I think on its face, is just indefensible” (Hausfather, 2017). Climate change, and its likely severe impacts on the global economy, is the millennial problem for policymakers, business leaders and society. Temperature and greenhouse gas emission are dramatically increasing that shows in the following diagram:
Figure 1.1: Trend of temperature and greenhouse gas emissions Source: (Thompson, 2014)
The preliminary reason for climate change’s adverse effects is that greenhouse gases emitted into the atmosphere are higher than they should be, and the effects of climate change increase as greenhouse gas and carbon dioxide emissions continue to increase. Since climate change and its effects are measurable they help to shape its own economic models and analysis (Stern, 2009). Besides the social impacts of climate change, it is seen to have significant direct and/or indirect economic impacts on various sectors.
However, climate change does not only create new risks, costs or obligations for the sectors but also offers new opportunities. Financial institutions should identify the impacts of climate change on customers and their own activities and incorporate climate change-related risks into their business processes and policies in order to mitigate such risks and make the best use of opportunities. “The untold story is that climate change offers opportunities as well as risks, and business is already changing,” said Michael W. Toffel Professor of Environmental Management at Harvard Business School (HBS) (Jokic, 2019).
Today, the biggest environmental problem in this transformation process is climate change. Global warming is one of the most significant issues that cause climate change. Global warming is the name given to the increase in the average temperatures of the Earth’s atmosphere and oceans as a result of the greenhouse effect of gases emitted to the atmosphere by humans. Global warming is thought to be caused by increased greenhouse gases in the atmosphere. It has been suggested that certain gases such as carbon dioxide (CO2), water vapor, and methane cause the earth to overheat by preventing radiation from the sun on one hand and absorbing heat from this radiation on the other. For example, the world’s temperature has risen by 0.4 to 0.8 °C since the industrial revolution (IPCC, 2001). The main reason for this is the CO2 and other greenhouse gases released by the combustion of fossil fuels.
The scientific community predicts that if no measures are taken to reduce greenhouse gas emissions accumulated in the atmosphere, the world average temperature will rise by 2 degrees at the end of this century. Accordingly, a chain of disasters that may occur melting of glaciers in the mountains and arctic regions, (the global sea level is increased by 17 cm); rising seawater levels, (global temperature increased by 0.74 ° C); loss of soil in coastal areas, mixing of freshwater resources and water problems, excessive evaporation and drought saw with the high-temperature increase, increasing fires; 20% reduction in, lake and river, waters. Plant and animal species cannot withstand these changes. Greenhouse gas emissions by economic sectors are shown in the diagram below:
Figure 1.3: Greenhouse Gas Emissions by Economic Sectors Source: (IPCC, 2014)
It is suggested that the disappearance or decrease, in some regions due to the overheating of the virus species change and will result in the development of epidemics, the migration wave will occur in the local and global scale of the transport capacity of the cities as a result of the spread of problems and it is suggested that the problems will spread.
1.2 Research Rationale and Personal Reasoning
I have been working on donor-funded infrastructure projects for about six years as a project engineer and have a degree of understanding of how much the environment and economy neglect each other. Although no day passes without hearing news related to climate change and its effect on the planet and humanity. This year, in early June, I met a couple of Camden Council’s professionals at Swiss Cottage Library and they asked me to fill a form if I had an interest in attending three meetings of “Camden’s Citizen’s Assembly on the Climate Crisis” as initial information is given at Appendix 1. I was been selected to attend meetings on 1st, 11th and 20th July 2019. These were extremely informative, dealing with real-world issues and then need to take immediate action, which spurred my interest and desire to investigate the subject based on grey literature.
1.3 Research questions
- How does global climate change affect the economic performance of businesses?
- What are the processes that businesses are applying to adapt to the impact of climate changes?
- What are the scopes of risk assessment of climate changes in businesses?
- What challenges are being faced by businesses in adapting to the impact of climate change?
- How can businesses reduce the adverse effect of climate change?
1.4 Research Aims and Objectives
The aim of the research is to analyze the economic impact of global climate change on businesses. Additionally, this study aims to provide recommendations for businesses on how they can reduce the adverse impact of climate change.
- To assess the economic impact of climate change on business and industry
- To analyze the process of businesses to adapt to climate change
- To find out the scope of risk assessment of climate change in businesses
- To find out the challenges faced by business in adapting to climate change
- To provide recommendation for businesses on how they can reduce the adverse effect of climate changes
1.5 Methodological Approach
This study mainly applies the qualitative method, where interview technique and gray litterateur are applied to collect qualitative data. Both primary and secondary data sources are applied. The interview technique is the key primary tool, where several books, journals and websites are the key secondary data sources. An inductive research approach is applied in this study to conclude the research finding and develop theories. As the study is based on a qualitative method, thematic data analysis technique is applied to analyze and present the research findings………………….
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